What are the main changes introduced by the amendments to the merger and separation agreements?

The amendments primarily focus on the financing arrangements for Tyco's Flow Control business. They outline provisions for Flow Control to issue up to $900 million in senior notes and secure a credit facility of up to $1.2 billion prior to its distribution and merger with Pentair. They also address contingency financing in the form of a potential bridge note and clarify board selection for the spun-off entity.

What is the role of Pentair in these financing arrangements?

Pentair plays a crucial role in the financing. It will cooperate with Tyco and Flow Control to arrange the senior credit facility and has agreed to contribute cash to an escrow account related to the senior notes issuance if necessary. Importantly, Pentair agrees to indemnify Tyco and its subsidiaries against losses arising from the senior notes issuance and credit facility, and reimburse Tyco for related third-party costs.

What happens if Flow Control cannot secure the senior notes or credit facility on acceptable terms?

If Flow Control or its subsidiary is unable to enter into the senior credit facility or issue senior notes on acceptable terms, instead of an intercompany note, Flow Control will issue a one-year unsecured 'bridge' note for up to $500 million to a Tyco subsidiary. This bridge note will bear interest at a rate of 14.0% and will be prepayable.

How does this filing impact Tyco's shareholders?

For Tyco shareholders, this filing provides clarity on the financial structure of the Flow Control divestiture and the subsequent merger with Pentair. It shows that Tyco is actively managing the financing for these complex transactions and has put measures in place to mitigate financial risks associated with the new debt issuances, including Pentair's indemnification.

JCI 8-K: Material Agreements

Summary

This 8-K filing from Tyco International Ltd. (though filed on July 30, 2012, it pertains to events on July 25, 2012) details amendments to the previously announced merger and separation agreements concerning the divestiture of its Flow Control business and its merger with Pentair, Inc. The amendments primarily address the financing arrangements and governance for the separated Flow Control entity. Key changes include provisions for issuing up to $900 million in senior notes and establishing a credit facility of up to $1.2 billion (with an option to increase) for Flow Control prior to its distribution to shareholders and subsequent merger with Pentair. Investors should note the details surrounding the financing, including the potential for an intercompany note or a high-interest bridge note of up to $500 million if the senior financing is not secured on acceptable terms. Pentair has agreed to indemnify Tyco for losses related to the issuance of these notes and the credit facility, providing some risk mitigation for Tyco. The amendments also clarify the selection process for Flow Control's Board of Directors.

Key Highlights

1Tyco International Ltd. filed an 8-K on July 30, 2012, reporting on events from July 25, 2012, related to its previously announced separation and merger plans.
2Amendments were made to the Merger Agreement with Pentair and the Separation Agreement for Flow Control.
3Flow Control is expected to issue up to $900 million in unsecured senior notes prior to its distribution to Tyco shareholders.
4A senior credit facility of up to $1.2 billion (with a $500 million expansion option) is to be established for Flow Control.
5Provisions for an intercompany note of up to $500 million or a 14.0% interest bridge note are outlined if senior financing is not secured on acceptable terms.
6Pentair will indemnify Tyco and its subsidiaries for losses arising from the issuance of senior notes and the establishment of the senior credit facility by Flow Control.
7The amendments include details on the selection of Flow Control's Board of Directors prior to the shareholder proxy mailing.

Johnson Controls International plc 8-K Report, Material Agreement (Jul 31, 2012)

Summary

Key Highlights

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